INB 20012 - ASIAN REGIONALISM & GLOBAL

BUSINESS
Assignment 1: Blog Writing

ASEAN’s Digitalisation: Analysis of the Opportunities and

Challenges.

1. Blog Scene Introduction:

In the rapidly changing landscape of ASEAN's digital future, opportunities for extraordinary
expansion coexist with significant challenges. This blog embarks on a journey through the
intricate structure of ASEAN's digitization, exploring both the opportunities and the major
challenges that lie ahead. Optimism and caution coexist in ASEAN's digital economy debate,
underscoring the region's dual path toward a digitalized future. Although the trillion-dollar
forecast for ASEAN's digital economy by 2030 makes headlines, the story behind it is more
nuanced and influenced by internal divisions among member states, geopolitical issues,
national supervision and restrictions on network security, etc. This blog will examine these
topics from many angles in relation to ASEAN's digital future.

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 2. Global Business & Asian Regionalism Relevance:

The growth of the digital economy in ASEAN nations has a big impact on relationships with
global businesses. Massive market potential are presented by the region's growing middle
class and strong economic growth, which are further enabled by digital technologies. To
access customers and businesses more effectively, multinational corporations take advantage
of this by investing in infrastructure like broadband networks and digital payment systems.
Moreover, Digital innovations help supply chain management by increasing efficiency and
transparency. For example, businesses like Dell use IoT technology to monitor the movement
of commodities. Nevertheless, the supply chain will also be impacted by changes in
municipal government. The impact of the supply chain on global business is exemplified by
the way that the technological competition between China and the United States has altered
the country of supply, and the epidemic has further destabilized the chain. Similarly, The
ASEAN Data Management Framework and the ASEAN E-commerce Agreement, for
example, demonstrate how ASEAN's regional cooperation promotes technological
cooperation and innovation, helping firms to grow and become more competitive. This
connectivity highlights the mutually beneficial interaction between the digital economy of
ASEAN and international companies (Tran et al., 2022).

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As for the Asian regionalism, beyond just providing economic benefits, ASEAN's digital
activities are important for influencing Asian regionalism. The ASEAN countries can more
easily sell their goods and services to one another thanks to initiatives like the Regional
Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP), which promote regional integration and
cross-border e-commerce. Additionally, completing infrastructure—such as data centres and
broadband networks—improves digital connectivity. Besides that, In order to increase the
efficiency of government work and provide citizens with online access to services, ASEAN
countries are also collaborating to develop e-government services. Additionally, by
emphasising digital education skills, ASEAN will increase employment opportunities locally
and supply a larger pool of digital talent for international businesses. Additionally, the talent
pool will support the creative use of digital technologies through knowledge sharing and
strengthen ASEAN's digital capabilities. Furthermore, Encouraging digital technology
standardisation and interoperability across ASEAN nations through harmonisation of laws
and regulations improves connectivity both inside and outside the region. A key component
of this is data protection and privacy, and pertinent laws created by ASEAN nations have a
big influence on how information is gathered, used, and stored for multinational corporations.
One such law is China's Data Security Law, which places limitations on the use of foreign
cloud services (Costa Buranelli, 2021).

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 3. Socio-Political issues:

The article's discussion of social and political issues covers multiple regions and presents a
variety of challenges. The United States government has restricted investment involving
sensitive technologies and critical infrastructure, particularly for China's investment in high-
tech enterprises. Tensions between China and the United States are expressed through
measures such as export restrictions, which prohibit the export of technologies and products
to China, and investment restrictions. Examining overseas investments to make sure they
don't compromise U.S. national security is another duty of the Committee on overseas
Investment in the United States (CFIUS). This is a sociopolitical issue of unequal resource
allocation and social inequality. whereas Myanmar faces a severe economic crisis
characterised by high inflation and currency devaluation, which makes it difficult to
implement digitalization. Additionally, the country is affected by civil unrest, unstable
regimes, and the pandemic, which widens the digital divide among ASEAN countries. A
cohesive digital economy is further hampered by strong regulations and data localization in
ASEAN member nations like Indonesia, Vietnam, and Malaysia, in part because of cultural
and religious factors. These problems highlight the inequalities and complexity reshaping
these regions' digital landscapes (Anthony Toh Han Yang, 2023).

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 4. Evaluation of Emerging Trends in these countries:

According to Malaysia's Emerging Trends, the country is making a deliberate attempt to

develop its high-tech and digital economies. This is demonstrated by strategic investments
and the promotion of trade partnerships, especially with ASEAN countries. The ASEAN Free
Trade Area (AFTA) is being implemented with the intention of promoting intraregional trade
and removing trade barriers among its member nations. Malaysia's GDP per capita is
predicted to reach US $26,000 by 2035, making it the most advanced economy in the Asia-
Pacific area. Apart from that, Malaysia's approach to trade diversification has been proactive,
as demonstrated by its trade relations with China, the US, and the EU. In particular, with
China, complementarity is evident and the trade structure is still optimising, with plastics,
electronic products, and mineral products being Malaysia's main export commodities to
China. Consequently, Malaysia's top exports are petrol, oil, and electronics. The demand for
electronic and non-electronic products is expected to drive a 5.5% growth in Malaysia's
manufactured goods exports by 2024; the demand for palm oil and related products is
expected to drive a 1.7% growth in agricultural exports; and a 2.9% growth in mineral
exports (Kim Man & Yang, 2021).

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In contrast, The Emerging Trends in Vietnam showcases the nation's impressive
achievements in agricultural and aquatic exports, driven by expanding trade volumes and
strategic partnerships with important allies such as the US, China, and EU. Vietnam's foreign
commerce has been increasing recently, and by 2024, it is expected to surpass the anticipated
export rate by 6%. On the other hand, Vietnam has been working to increase the number of
trading partners it has, forging strong ties with the US, the UK, Japan, and other Asian
nations. As a result, Vietnam has ratified a number of free trade agreements (FTAs), including
the CPTPP, which has stimulated global trade. Vietnam's trade relationship with the US has
also grown, ranking eighth among US trading partners. Besides that, Vietnam is attracting a
lot of foreign direct investment as it rises to prominence as a manufacturing and electronics
powerhouse. Vietnam is also concentrating on digital transformation and developing
platforms to help businesses penetrate target markets more quickly and effectively. The
newspaper reports that Vietnam is the country with the fastest-growing Internet market
globally, and by 2025, the country's digital economy is predicted to increase to over $300
billion (Ngoc, 2022).

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 5. Possible implications identified in the article:

The article's possible implications show ASEAN's both opportunities and challenges in the
digital sphere. On the one hand, the importance of digitalization in ASEAN offers
tremendous chances for entrepreneurship, innovation, and economic growth. Social
transformation is accelerated by digitalization, which also promotes economic integration and
raises living standards. As a result, in line with its efforts towards digitization, ASEAN has
put in place a number of initiatives to improve cybersecurity and digital innovation. On top of
that, the digital economy in ASEAN has enormous potential; estimates suggest that it could
expand by over $1 trillion by 2030. This development will be fueled by the region's
expanding broadband connectivity and rising internet adoption, which will lower poverty and
open up new avenues for economic integration.

The challenges include low digital literacy and infrastructure in nations like Cambodia, Laos,
Thailand, and Vietnam that could impede the region's progress towards digitalization. The
Myanmar Civil War and the ensuing economic crisis also pose a serious threat to ASEAN's
digital future plan. Apart from that, there exist barriers to digital trade between ASEAN
nations, which will hinder the growth and lower the region's digital economy's
competitiveness. A research by the European Centre for International Political Economy
(ECIPE) found that there are significant barriers to digital trade in Indonesia, Vietnam,
Thailand, and Malaysia (Ferracane & Marel, 2020). According to different research by Liu et
al. (2023) six out of ten ASEAN members lack a single data unit and market and have
differing degrees of data localization. Additionally, issues with environmental safety that are
made worse by internal conflicts in nations like Myanmar have a direct impact on the goals of
the ASEAN digital master plan. The pandemic has intensified national impulses towards
digital protectionism, which has raised obstacles to cross-border data flow and e-commerce
and ultimately hampered regional economic development and technical advancement. Digital
protectionism also aims to preserve national security, advance technical dominance, and
shield domestic businesses from outside competition (Taher, 2021).

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 6. International Trade Policy Concerns:

According to Admin, (2024), A key policy initiative, the Digital Economy Framework
Agreement (DEFA) aims to accelerate ASEAN's transition into a leading digital economy by
promoting increased digital cooperation, opening the door for regional digital integration, and
facilitating inclusive growth and development throughout Southeast Asia within the ASEAN
region. By fostering interoperability across ASEAN member nations, lowering obstacles, and
harmonizing legislation, DEFA aims to ease digital trade. Nonetheless, responses to DEFA
differ between nations. Singapore, for instance, has voiced happiness with DEFA, seeing it as
a positive development for advancing digital commerce and regional economic integration.
According to Erh (2023), Singapore views DEFA as complementary to its digital trade plans
and strengthening its standing as a digital centre in Southeast Asia.

Conversely, ASEAN's foreign trade faces obstacles due to Digital Protectionism.

Governments take steps to safeguard domestic digital sectors, such limiting data transfer and
reducing foreign investment in high-tech companies. One prominent instance of digital
protectionism is China's adoption of the Data Security Law, which limits data transmission
under the pretext of national security. Such acts may impede international digital investment
and commerce, provoking responses from other nations (Kaewkamol Pitakdumrongkit,
2018). For example, the United States has voiced its displeasure with China's protectionist
measures in the digital sphere, considering them to be unfair trade practices that harm
international businesses. In response, the US has placed limitations on Chinese investments in
high-tech companies, regardless of the investors' military ties (Sukar & Ahmed, 2019).

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 7. References:

Admin, T. A. (2024). The ASEAN Digital Economy Framework Agreement. The ASEAN
Magazine. https://theaseanmagazine.asean.org/article/the-asean-digital-economy-
framework-agreement/#:~:text=The%20ASEAN%20Digital%20Economy
%20Framework%20Agreement%20%28DEFA%29%20aims

Anthony Toh Han Yang. (2023). ASEAN’s Digital Future: Promising but not Without
Difficult Challenges. The Geopolitics. https://thegeopolitics.com/aseans-digital-
future-promising-but-not-without-difficult-challenges/

Costa Buranelli, F. (2021). Central Asian regionalism or central asian order? some reflections
Central Asian Affairs, 8(1), 1-26. https://doi.org/10.30965/22142290-bia10015

Erh, J. (2023). Singapore’s Digital Transformation Journey. Journal of Southeast Asian

Economies, 40(1), 4–31. https://www.jstor.org/stable/27211223

Ferracane, M. F., & Marel, E. (2020). Patterns of trade restrictiveness in online platforms: A
first look. The World Economy, 43(11), 2932–2959.
https://doi.org/10.1111/twec.13030

Liu, J., Sengstschmid, U., & Ge, Y. (2023). Facilitating Data Flows Across ASEAN:
Challenges and Policy Directions. Social Science Research Network.
https://doi.org/10.2139/ssrn.4547683

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Kim Man, M. M., & Yang, L. R. (2021). The future prospect of digital marketing in the
Malaysian context. International Business Research, 15(1),
72.https://doi.org/10.5539/ibr.v15n1p72

Kaewkamol Pitakdumrongkit. (2018). ADDRESSING DIGITAL PROTECTIONISM IN

ASEAN TOWARDS BETTER REGIONAL GOVERNANCE IN THE DIGITAL
AGE.)
https://www.rsis.edu.sg/wp-content/uploads/2018/03/PR180426_Addressing-
Digital-Protectionism-in-ASEAN.pdf

‌ Ngoc, P. H. (2022). Financial Resources for Innovative Startups - studies in emerging

economies and trends for studies in Vietnam, International Journal of
Management» & Entrepreneurship Research, 4(11); 458-468.
https://doi.org/10.51594/ijmer.v4i11.404

Sukar, A., & Ahmed, S. (2019). Rise of trade protectionism: The case of US-Sino trade
war. Transnational Corporations Review, 11(4), 1–11.
https://doi.org/10.1080/19186444.2019.1684133

Sri Mulyani Indrawati. (2017). ASEAN in the Digital Era: Opportunities and Challenges.
CARI ASEAN Research and Advocacy.
https://cariasean.org/publications/advancing-asean-in-the-digital-age/asean-in-
the-digital-era-opportunities-and-challenges/

Taher, G. (2021). E-commerce: Advantages and limitations. International Journal of

Academic Research in Accounting, Finance ánd Management Sciences,
11(1).https://doi.org/10.6007/jarafms/v11-11/8987

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Tran, L. Q., Phan, D. T., & Nguyen, M. T. (2022). Digital Economy: A Comparative Study in
ASEAN. Theory, Methodology, Practice, 18(2), 83-92.
https://doi.org/10.18096/tmp.2022.02.05

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